I-T - SETCOM order waiving off interest is nullity, where if it pre-dates certain precedent judgments of Apex Court specifying Commission's power to do so: SC
BY TIOL News Service
NEW DELHI, MAR 05, 2019: THE issue before the Apex Court was whether a SETCOM order waiving off interest levied u/s 234A, 234B & 234C, is a nullity, if it pre-dates certain precedent judgments of the Apex Court which specify the Commission's power to waive off interest. YES is the answer. The Bench also held that by extension, an order of the High Court upholding such nullified findings of the Commission, would lack jurisdiction.
Facts of the case
THE assessee-company is a private limited company. During the relevant AY, Search & seizure operations were conducted at the premises of the assessee-company. Thereafter, assessment proceedings were initiated to determine the tax liability. During pendency of such proceedings, the assessee approached the Settlement Commission and filed application for settlement. The Commission passed an order, making certain additions and waiving interest payable u/s 234A, 234B & 234C.
Against such an order, both the assessee & the Revenue filed applications u/s 154 for rectification of the Commission's order. While the Commission dismissed the assessee's application, that of the Revenue was partly allowed. The assessee then approached the High Court, which proceeded to quash the order passed by the Commission. The Revenue then filed petitions, which the High Court allowed in substance. The High Court proceeded to modify the Commissioner's order and reversed the findings in respect of the waiver of interest. Hence, the assessee approached the Supreme Court, contesting such findings.
On appeal, the Supreme Court was of the view that,
++ the issue involved in these appeals is governed by the law laid down by the decision of two Constitution Benches of the Apex Court. The two cases are Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala & Ors. and Brij Lal & Ors. vs. Commissioner of Income Tax, Jalandhar. From a cumulative reading of the decision given in both cases, the question arises for consideration in these appeals is whether the High Court was justified in allowing the petitions (SCAs) filed by the Revenue;
++ when the Settlement Commission passed the first order on 11.08.2000 disposing of the application of the assessee, the issue with regard to the powers of the Settlement Commission was not settled by any decision of this Court. These two decisions were rendered after the Settlement Commission passed the order in this case. Therefore, the Settlement Commission had no occasion to examine the issue in question in the context of law laid down by this Court in these two decisions. However, the issue in question was at that time, pending before the High Court in the petitions(SCAs);
++ in such cases, the High Court instead of going into the merits of the issue, should have set aside the order dated 11.08.2000 passed by the Settlement Commission and remanded the case to the Settlement Commission for deciding the issue relating to waiver of interest payable under Sections 234A , 234B, and 234C of the Act afresh keeping in view the scope and the extent of powers of the Settlement Commissioner in relation to waiver of interest as laid down in the two decisions. However, the High Court went on to commit a jurisdictional error when it observed that they (High Court) adopt the directions contained in the order of the Settlement Commission dated 11.10.2002 and then went on to make such directions as a part of the order in relation to waiver of interest. This approach of the High Court is wholly without jurisdiction;
++ as the order dated 11.10.2002 of the Settlement Commission was already held bad in law on the ground that it was passed under Section 154 of the Act, the same was neither in existence for any purpose and nor it could be relied upon by the High Court much less for making it a part of their order for issuing a writ. Hence the order passed by the High Court and the order dated 11.08.2000 passed by the Settlement Commission are set aside. The matter warrants remand to the Settlement Commission for deciding the matter in question afresh on merits.
(See 2019-TIOL-100-SC-IT)
